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Your product or parts of it may be bought in full or made from raw materials that you purchase from suppliers. Working closely and with these suppliers to develop strong relationships and develop efficient business systems to facilitate your purchasing requirements can help you to; increase profitability, maximise efficiencies, optimise your inventory levels, and reduce storage requirements.

When selecting suppliers it is important to carefully evaluate their offering considering various factors as following:

Number of Suppliers

Dealing with a single supplier can be very efficient and offer opportunities to forge strategic linkages increasing quantity discounts, levels of cooperation and responsiveness. However utilising multiple suppliers provides options protecting against an over reliance on a single supplier and reduce your risk. Utilising multiple suppliers also provides the opportunity to ensure competitiveness.

Supplier Reliability

Reliability of the supplier is their ability to deliver a quality product to your business on time.  Problems with deliveries can cause major disruptions to your business. You can evaluate the reliability of a supplier by asking for their on time delivery statistics or by using their existing customers as a reference. It is also good practice to start out with a small order when using a new supplier so you can evaluate their performance. 

Evaluating prices

It is well worth spending time to research different suppliers to gain an understanding of the range of services and prices on offer. You can then negotiate final pricing and payment terms with the suppliers to ensure you receive the best possible deal.

Additional Services

This involves the supplier's ability to assist your business to coordinate your inventory control systems and ordering processes. Developing close links and even integrated ordering systems can be a good way to improve supply efficiencies and reduce procurement costs. There can be benefits for both your business and your suppliers if this is managed effectively.